Melanoma Corp. makes XXX product that it sells to retailers. The company uses a job order costing system in which predetermined overhead rates are used to apply factory cost to jobs. The predetermined rate in the AW department is based on direct labor cost and in BW department is based on the machine
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Melanoma Corp. makes XXX product that it sells to retailers. The company uses a job order costing system in which predetermined
|
|
AW Department |
BW Department |
|
Direct labor hours |
24,000 |
120,000 |
|
Machine hours |
140,000 |
10,000 |
|
Direct Material Cost |
1,020,000 |
1,300,000 |
|
Direct Labor Cost |
260,000 |
840,000 |
|
FOH Cost |
1,204,000 |
14,700,000 |
Job 401 was started on February 1 and completed on February 25. The company's cost records show the following information concerning the job.
|
|
AW Department |
BW Department |
|
Direct Labor Hours |
60 |
170 |
|
Machine hours |
220 |
40 |
|
Direct Material Used |
940 |
664 |
|
Direct Labor Cost |
580 |
1360 |
At the end of the year, the records of the company show the actual cost and data for all jobs worked during the year.
|
|
AW Department |
BW Department |
|
Direct Labor Hours |
20,000 |
124,000 |
|
Machine Hours |
130,000 |
18,000 |
|
Direct Material COst |
860,000 |
1,360,000 |
|
Direct Labor Cost |
216,000 |
872,000 |
|
FOH Cost |
1,140,000 |
15,000,000 |
- Compute for the total over/(under)- applied factory overhead at the end of the year. Overapplied factory overhead is encoded as a positive number, ex. 12345.67; Underapplied factory overhead is encoded in a parenthesis, ex. (12345.67).
- Compute the unit
cost of Job 401 assuming it contained 200 units.
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